house price inflation at 7-year low
05 December 2007

Growth in house prices in the middle-segment of the market declined to a nominal 12.5 percent year-on-year in November 2007, the lowest price growth since January 2000, when it was 12 percent, Absa said.  Nominal price growth of 13.6 percent year-on-year (y/y) was recorded in October this year.

The latest Absa House Price Index indicated that the average price of a house was about R963 000 in November. "If recent trends in both year-on-year and month-on-month house price growth are to continue, price growth of just above 11 percent may be recorded in December on an annual basis," Absa said.

Nominal growth in house prices may drop to as low as nine percent in 2008, largely driven by the tightening of monetary policy since mid-2006, as well as a slower pace of economic expansion, lower real household disposable income growth, and the impact of the National Credit Act.

Absa bases its index on the average house price of mortgage applications it receives. Standard Bank, however, relies on a median house price for its index.

Standard Bank's median house price index moderated to 6.5 percent y/y in November following a relatively strong growth of 10.2 percent y/y recorded in October. The five-month moving average growth rate slowed to a rate below 10 percent for the first time since May 2007. It was recorded at 7.7 percent y/y in November.

The median house price for the month of November declined to R575 000, down from R595 000 in October, Standard Bank said.

Sapa, www.iafrica.com